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한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском I. Introduction Russia invaded Ukraine in February 2022. As the invasion enters its third year, its most immediate and visible consequences have been loss of life and large numbers of refugees from Ukraine. However, given the interconnected structure of the international political, economic, and policy systems, the ramifications of the conflict can be felt well beyond Ukraine and Russia.Much of the recent literature and commentaries have focused on the military and strategic lessons learned from the ongoing Ukraine conflict (Biddle 2022; 2023; Dijkstra et al. 2023). However, the conflict has potentially much wider global consequences for various policy areas. Robert Jervis noted that the international system is not only interconnected but also often displays nonlinear relationships and that “outcomes cannot be understood without adding together the units or their relations.” (Jervis 1997, 6).  This article focuses on the economic effects of the Ukraine war, emphasizing the energy issue, because Russia has been a major player in the global energy market.  II. Literature on the effects of wars Wars have the potential to alter the parties and “transform the future” of belligerents (Ikle 1991), they also bring about fundamental changes to the international system (Gilpin 1981).  Scholars in Economics have provided considerable analysis of the macroeconomic effects of a conflict across spatial levels: locally, nationally, regionally and internationally. Studies have examined the effects of specific wars such as the Syrian civil war (Kešeljević and Spruk, 2023) or the Iraq war (Bilmes and Stiglitz 2006). They have also examined the effects of war in general. For instance, Reuven Glick and Alan Taylor (2010) examine bilateral trade relations from 1870 to 1997 and find “large and persistent impacts of wars on trade, and hence on national and global economic welfare.” Similarly, Vally Koubi (2005) investigates the effects of inter- and intrastate wars on a sample of countries and finds that the combined pre-war contemporaneous and postwar effects on economic growth are negative.  A “war ruin” school emphasizes that the destruction caused by wars is accompanied by higher inflation, unproductive resource spending on the military, and war debt (Chan 1985; Diehl and Goertz 1985; Russett 1970). By contrast, a “war renewal” school argued that there could be longer-term positive economic effects from war because war can lead to increased efficiency in the economy by reducing the power of rent-seeking special interests, triggering technological innovation, and advancing human capital (Olson 1982; Organski and Kugler 1980). Early analysis estimated that the Russian invasion of Ukraine had an economic cost of 1% of global GDP in 2022 (Liadze et al. 2023)Some political scientists focused on the domestic consequences of war. For example, Electoral political scientists have often examined the effects of war on public opinion. A key concern has been whether war produces a “rally around the flag effects” to bolster the support of incumbent leaders – or whether war weariness can contribute to declining support for governments, including those governments committed to conflicts abroad. John Mueller (1970) was the first scholar to develop the concept of the “rally-round-the-flag”, with later scholars identifying some of the factors that may shape or mitigate the effect (Dinesen and Jaeger 2013). Kseniya Kizilova and Pippa Norris (2023) considered any rally effects during the first few months of the Ukraine war. They claim that the reason that motivated Putin’s military invasion was an attempt to boost popular support among the Russian electorate. They show evidence of a surge in support for Putin following the invasion, which persisted longer than usual in democratic systems. However, Kizilova and Norris question whether this will likely be sustained as the economic costs of the war increase.   III. Brief Summary of the Ukraine War The roots of the Ukraine war go back to the early 1990s when Ukraine declared independence from the Soviet Union. While the Ukrainian economy was still firmly tied to the Russian economy, the country shifted its political focus towards the EU and NATO. This shift culminated in the Orange Revolution 2004 and the “Euromaidan” demonstrations in 2013. Portraying the “Euromaidan” protests as a Western-backed coup, Russia invaded Crimea and declared the annexation of Crimea into Russia in March 2014. Conflict soon erupted in the Eastern regions of Donetsk and Luhansk, where Russia supported pro-Russian separatist forces (Walker 2023a). Despite attempts to negotiate a ceasefire through the Minsk Agreement I and II, the conflict in the Eastern part of Ukraine had continued (Walker 2023a), resulting in over 14,000 deaths between 2014 and 2021. Against this backdrop, on 21 February, 2022, Russia recognized the independence of Donetsk and Luhansk. Three days later, confounding most Western observer’s expectations, Russia launched a full-scale invasion of Ukraine, calling it a “special military operation”. During the initial weeks, Russia made substantial advances (CIA Fact-book 2024) but failed to take Kyiv in the face of strong Ukrainian resistance supported by Western allies. In October 2022, Russia declared the annexation of Donetsk, Luhansk, Kherson and Zaporizhzhia (even though they were not entirely under Russian control) (Walker 2023b). As of February 2025, the meeting between the US and Russia to end the war is underway. IV. The Effects of the Ukraine war The impacts of war are far-reaching and devastating. War causes immense destruction of property and loss of life. It also creates psychological trauma for those who have experienced it firsthand. War can also have long-term economic impacts, such as increased unemployment and poverty. War can also lead to the displacement of people, as we have seen the millions of refugees who have been forced to flee their homes due to conflicts. War can also have political effects, such as creating new states or weakening existing nations. It can also lead to the rise of authoritarian regimes in many post-war nations. War can also increase militarization as nations seek to protect themselves from future conflicts.  Regarding the effects of the Ukraine war, Bin Zhang and Sheripzhan Nadyrov (2024) claimed that in addition to inexpressible human suffering and the destruction of infrastructure, the economic and financial damage inflicted on European countries would be profound, especially in the context of rising inflation. The positive changes due to the conflict may occur in four areas: acceleration of the Green Deal, increased European attention to defense, improved prospects for individual countries to join the European Union (EU), and the unfolding of broader Eurasian economic integration.  The Ukraine war might have broader economic consequences. The supply chains may be affected because of the destruction of infrastructures and resources. War mobilization may affect the workforce and economic production. Actors in the economy may also act strategically to deploy resources elsewhere, to support the war effort or because the war has affected incentive structures or decide to cease production altogether because of expected losses. These effects can be local to geographical areas engulfed in conflict but also cause ripple effects to a broader regional area and the global economy. Trade, production, consumption, inflation, growth and employment patterns may all be influenced.  Figure 1: Global implications of the Russian invasion of Ukraine for the European and World Economies. Source: Peterson K. Ozili. (2022)  Ozili (2022) claimed that the scale of the Ukraine war had a negative impact on the economies of almost all countries around the world. As Figure 1 shows, the main effects of the Ukraine war on the global economy are: Rising Oil and Gas Prices – European countries import about a quarter of their oil and 40% of their natural gas from the Russian Federation. The Russian Federation is the second largest oil producer in the world and the largest supplier of natural gas to Europe. After the invasion, European oil companies will have problems getting these resources from the Russian Federation. Even before the Russian invasion, oil prices rose because of growing tensions between countries, the COVID-19 pandemic, and other factors, but remained in the $80–95 per barrel range. After the invasion, this price reached $100 and could reach $140. Natural gas prices have risen 20% since the war began. Rising gas prices can drive high inflation and increase public utility bills.  Decline in production and economic growth, rising global inflation, and the cost of living are more related to the consequences of the above-mentioned factors, especially rising oil and gas prices, which lead to high inflation and, therefore, a decline in supply and demand.  Impact on the global banking system: This factor’s negative effect will be felt more strongly by Russian banks and is associated with international financial sanctions. Foreign banks that will suffer significant damage from sanctions are those that have conducted large operations in the Russian Federation.  The Russian Federation’s export ban and its own counter-ban on imports of foreign products disrupted the global supply chain, resulting in shortages and higher prices for imported commodities. As Ozili (2022) claimed, higher inflation is a perceived negative consequence of the Russian invasion of Ukraine. As Figure 2 shows, inflation in the EU jumped in the first month of the invasion, and the increasing trend continues. EU inflation in 2022 peaked in October and amounted to 11.5%, a historical record. However, inflation has slowly declined as energy prices have gone down.  This higher inflation in Europe resulted from an increase in energy prices. As Figures 3, 4, and 5 show, energy prices in Europe skyrocketed in 2022. As Figure 3 shows, energy prices have been the most important component of inflation in the EU. Figure 2: Average inflation rate in the EU (%). Source: EurostatCreated with Datawrapper   Figure 3: Main components of inflation rate in the Euro areas.  Figure 4: Natural gas prices in Europe, January 2021- end 2024  Figure 5: Crude oil price, January 2020-January 2025 Source: Eurostat Created with Datawrapper As Figure 6 shows, the inflation rate in major EU countries such as Germany and France followed the pattern of EU countries in which inflation skyrocketed in 2022 and then slowly declined over time. Figure 6: Inflation rate in major EU countries. Source: Eurostat Created with Datawrapper  As Ozili claimed, a lower growth rate was also a perceived negative consequence of the Russian invasion of Ukraine. As Figure 7 shows, GDP in the EU was down to 3.5 % in 2022 compared to 6.3% in 2021, and it was further down to 0.8 % in 2023 because economic stagnation and high inflation caused by the Ukraine war impacted European economies. The European Commission forecasts that the European economy will grow by 0.9 % in 2024 and 1.5% in 2025.  Figure 7: Average annual GDP growth rate in EU, 1996-2025. Following the pattern of entire EU countries, growth rates in four big European countries declined in 2022 & 2023 after Russia invaded Ukraine in February 2022 and are expected to grow moderately in 2024. The growth rates in four big European countries are in Table 1 and Figures 8-11.    Figure 8: Growth rate in Germany  Figure 9: Growth rate in France  Figure 10: Growth rate in the UK   Figure 11: Growth rate in Italy    Regarding the effect of the Ukraine war on the global banking system, the effect was minimal because most international financial sanctions targeted Russian banks. The sanctions, including the ban of selected Russian banks from SWIFT, only affected foreign banks with significant operations in Russia. Many foreign banks experienced losses after several Western countries imposed financial sanctions on Russian banks, the Russian Central Bank, and wealthy Russian individuals. The most affected banks were Austria’s Raiffeisenbank, Italy’s Unicredit, and France’s Société Générale. Other foreign banks recorded huge losses when they discontinued their operations in Russia. The losses were significant for small foreign banks and insignificant for large foreign banks.  After almost 20 months into the full-scale war, Ukraine’s banking sector continued demonstrating remarkable resilience and functioning as the backbone of the real economy. No bank runs have occurred, and access to cash was maintained. In addition to crucial reforms since 2014, comprehensive measures by the National Bank of Ukraine and a strong level of digitalization are key reasons for the observed stability. However, a significant liquidity buffer is not only a sign of resilience. It also reveals a lack of lending. The bank loan portfolio declined by around 30% compared to pre-war levels in real terms.  Regarding the impact of the Russian invasion of Ukraine on European stock markets, Figures 12 and 13 show the movement of the FTSE 100 and Euro Area Stock Market Index (EU50). As seen from Figures 12 & 13, after the Russian invasion of Ukraine in February 2022, both indices showed a noticeable decline in 2022, particularly early 2022. However, both indexes showed a noticeable rise after late 2022. Although there were ups and downs in both indices in 2023 and 2024, they show upward movement from 2023 to 2025.  Figure 12: The FTSE 100 index in Europe  Figure 13: Euro Area Stock Market Index (EU50)   Regarding the global supply chain, military operations during the Russian invasion of Ukraine disrupted multiple sectors. In particular, Russia’s ban on exports and retaliatory ban on imports, including its refusal to allow foreign cargoes to pass through its waterways and airspace during the early phase of the invasion, disrupted the global supply chain.  Regarding global supply chain disruption, this article focuses on Russian oil and gas because they are the most important Russian products that affect not only Europe but also the world.  Figures 14 and 15 show a world map of the countries that exported oil and gas to Europe: the color of the country corresponds to the percentage share of the country’s exports (indicated below the Figure). In 2021, around a third of Europe’s energy came from gas (34%) and oil (31%), according to Al Jazeera’s data analysis from BP’s Statistical Review of World Energy. Europe was the largest importer of natural gas in the world. Russia provided roughly 40% and 25% of the EU’s imported gas and oil before the Russian invasion of Ukraine. As Figure 16 shows, major gas importers from Russia in 2021 were European countries. Figure 14: EU oil import sources in 2021. Figure 15: EU natural gas import sources in 2021. Source: Eurostat  Figure 16: Major EU importers from Russian Gas in 2021.  However, since the Russian invasion of Ukraine in 2022, more than 9,119 new economic sanctions have been imposed on Russia, making it the most sanctioned country in the world. At least 46 countries or territories, including all 27 EU nations, have imposed sanctions on Russia or pledged to adopt a combination of US and EU sanctions. The sanctions have strongly affected, resulting in a 58% decline in exports to Russia and an 86% drop in imports from Russia between the first quarter of 2022 and the third quarter of 2024 (see Figure 17). Figure 17: EU trade with Russia  Russia has blamed these sanctions for impeding routine maintenance on its Nord Stream I gas pipeline which is the single biggest gas pipeline between Russia and Western Europe. In response, Russia cut its gas exports to the EU by around 80% since the Russian invasion, resulting in higher gas price in Europe, as Figure 18 shows. As a result, many European countries had to rethink their energy mix rapidly. The ripple effects of higher natural gas prices were felt in Europe and around the world. One of the most immediate consequences of Russia’s cut in gas delivery and sanctions on Russia, as well as sanctions on Russian was a sharp increase in European demand for LNG imports: in the first eight months of 2022, net LNG imports in Europe rose by two-thirds (by 45 billion cubic meters compared with the same period a year earlier).  Russia’s pipeline gas share in EU imports dropped from over 40% in 2021 to about 8% in 2023. Russia accounted for less than 15% of total EU gas imports for pipeline gas and LNG combined. The drop was possible mainly thanks to a sharp increase in LNG imports and an overall reduction in gas consumption in the EU. Figure 18: Natural gas price in Europe, January 2021- December 2024  Figure 19 shows how gas supply to the EU changed between 2021 and 2023. Import from Russia declined from over 150 billion cubic meters (bcm) in 2021 to less than 43 bcm. This was mainly compensated by a growing share of other partners. Import from US grew from 18.9 bcm in 2021 to 56.2 bcm in 2023. Import from Norway grew from 79.5 bcm in 2021 to 87.7 in 2023. Import from other partners increased from 41.6 bcm in 2021 to 62 bcm in 2023. Source: https://www.consilium.europa.eu/en/infographics/eu-gas-supply/#0) Figure 19: Major EU import sources of Gas.  However, as Figure 20, shows the EU’s import from Russian gas increased in volume in 2024.  Figure 20: EU trade of natural gas with Russia     EU imports of Russian petroleum oil also dropped. Russia was the largest provider of petroleum oil to the EU in 2021. After Russia's invasion of Ukraine, a major diversion in the trade of petroleum oil took place. In the third quarter of 2024, the volume of petroleum oil in the EU imported from Russia was 7% of what it had been in the first quarter of 2021 (see Figure 21) while its value had dropped to 10% in the same period.  The EU’s share of petroleum oil imports from Russia dropped from 18% in the third quarter of 2022 to 2% in the third quarter of 2024 (see Figure 22). The shares of the United States (+5 pp), Kazakhstan (+4 pp), Norway (+3 pp), and Saudi Arabia (+2 pp) increased in this period. The U.S. and Norway became the EU’s no.1 and no.2 petroleum oil providers, respectively. Figure 21: EU trade of petroleum oil with Russia    Figure 22: EU’s leading petroleum oil providers  The EU’s de-Russification policy has successfully reduced the EU’s dependence on Russian energy. However, the EU’s de-Russification policy allowed Russian fossil fuels to flow into other regions. The Centre for Research on Energy and Clean Air (CREA), a think-tank in Finland, compiles estimates of the monetary value of Russian fossil fuels procured by each country and region (Figure 23). Figures 23 & 24 show the countries that imported Russian coal, oil and gas since Russia’s invasion of Ukraine. China has been no. 1 country that imported Russian fossil fuels most, followed by India, Turkey, and the EU. Asian countries such as Malaysia, South Korea, Singapore, and Japan are among the major importers of Russian fossil fuels.  Figure 23: Value of Russian fossil fuels purchase (January 1, 2023 to January 24, 2024)  Figure 24: Largest importers of Russian fossil fuels (January 1, 2023 to February 16, 2025)  Moreover, according to Statista, value of fossil fuel exports from Russia from February 24, 2022 to January 27, 2025, by country and type is as follows as Figure 25 shows. China have been no. 1 country that imported Russian fossil fuels most, followed by India, Turkey, Germany, Hungary, Italy, and South Korea. Figure 25: value of fossil fuel exports from Russia from February 24, 2022 to January 27, 2025, by country and type.  However, Figures 23, 24, and 25 show some differences among major importers of Russian fossil fuels. China, India, and Turkey imported more Russian oil than gas or coal, while EU imported more Russian gas than oil or coal. Interestingly, South Korea imported more Russian coal than oil or gas. If we focus on Russian oil, we know that China and India’s imports of Russian oils significantly increased, as shown in Figures 26, 27, and 28. Since the EU imposed its embargo on Russian crude oil shipments, China purchased the most from Russia, at EUR 82.3 billion, followed by India and Türkiye, at EUR 47.0 billion and EUR 34.1 billion, respectively. The EU came in fourth, with oil and gas imports continuing mainly through pipelines to Eastern Europe. Notably, the oil-producing countries of Saudi Arabia and the United Arab Emirates (UAE) purchased oil (crude oil and petroleum products) from Russia.  Figure 26: Russian Oil Exports, by country and region, 2021-2024. (Navy blue: EU, Blue: US & UK, Light green: Turkey, Green: China, Yellow: India, Orange: Middle Eastern nations) Since the advent of the Ukraine crisis, China and India have been increasing the amount of crude oil they imported from Russia. According to statistics compiled by China’s General Administration of Customs, as Figure 27 shows, monthly imports increased from 6.38 million tons in March 2022 to 10.54 million tons in August 2023. Annual imports in 2023 exceeded 100 million tons for the first time.  Figure 27: China’s monthly crude oil imports from Russia (2021 to 2023)   As Figure 28 shows, India, which historically imported little crude oil from Russia, rapidly increased its imports partly due to the close geographical distance since the Russian invasion of Ukraine. According to statistics compiled by India’s Ministry of Commerce and Industry, its imports of Russian crude oil increased from March 2022 onward, with the total amount imported during 2022 exceeding 33 million tons. Crude oil imports from Russia grew into 2023, with monthly imports in May 2023 reaching a record-high level of 8.92 million tons. Annual crude oil imports from Russia in 2023 were expected to be at least 80 million tons. Figure 28: India’s monthly crude oil imports from Russia (January 2021 to November 2023)  In conclusion, after EU ban on Russia until January, 2025, the biggest buyers of Russia’s fossil fuels are as follows as Figure 29 shows: China has been no. 1 country that imported Russian coal, and crude oil the most, while the EU has been the largest importer of Russian Gas, both pipeline and LNG. Figure 29: Which country bought Russia’s fossil fuels after EU ban until January 2025 Still, although the EU has significantly reduced gas imports from Russia since Russia’s invasion of Ukraine, the EU still is no. 1 importer of Russian gas. However, China replaced EU as the biggest buyer of Russian crude oil. China is also the biggest buyer of Russian coal. Data from January 1, 2022 to January 1, 2025 show how Russian fossil fuels have flowed by geography as Figure 30 shows. The flows of Russian energy to EU have significantly declined, while the supply of Russian energy to China, India, and Turkey has significantly increased.  Figure 30: The flows of Russian energy to regions    Despite the EU’s restrictions on Russian-sourced energy, Russia has maintained a substantial revenue level by selling it to other countries. As Figure 31 shows, Russian energy revenues have somewhat declined between January 2022 and January 2025. Russian energy export revenue was a little less than 750 million Euro in January 2025 compared to 1000 million Euro in January 2022 just before the Russian invasion of Ukraine. However, considering that Russia’s total oil and gas revenues were 72.6 billion dollars in 2020, 122.9 billion in 2021, 169.5 billion in 2022, and 102.8 billion in 2023 and that 2022 was the best year for energy revenues in recent years, Russian energy revenues after the Russian invasion of Ukraine in February 2022 was not insufficient. This in turn has blunted the effectiveness of the sanctions imposed by the West.   Figure 31: Russian energy export revenue between 2022 and 2025.  V. Conclusion  This article examined the economic effects of the Ukraine war based on the argument of Ozili (2022). This article investigated four economic aspects (Inflation, economic growth, global banking, and global supply chain) on which the Ukraine war has had impacts. This article focused on Europe and the global supply chain because Russia and Ukraine were parts of Europe and because Russian energy has had a significant impact on Europea and all around the world.  This article showed that the Ukraine war significantly affected European inflation, economic growth, stock markets, and energy markets while the war had minimal impact on global banking. However, this article showed that the economic effects of the Ukraine war on inflation, economic growth, stock markets, and energy markets in Europe were short-term. The oil and gas prices in Europe skyrocketed in 2022 and then declined slowly and continuously. In addition, growth in Europe declined in 2022 & 2023 after Russia invaded Ukraine in 2022 and energy prices jumped up. However, European countries grew moderately in 2024 and are expected to increase in 2025. The same thing happened to European stock markets. The FTSE 100 and Euro Area Stock Market Index (EU50) showed a noticeable decline in 2022, in particularly early 2022. However, both indices showed a noticeable rise after late 2022.  On the other hand, after Russia invaded Ukraine, European countries significantly reduced imports of Russian fossil fuels. The EU’s de-Russification policy allowed Russian fossil fuels to flow into other regions. After EU’s imposition of sanctions on Russian energy, Russian fossil fuels mainly went to Asian and Middle East markets, mainly to China, India, and Turkey. 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한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Valued at over $3 trillion, Nvidia, the world’s largest market capitalisation, exemplifies the transformative power of the microprocessor sector, but Europe’s lagging position raises significant concerns about sovereignty and competitiveness. Some companies are stepping up, offering concrete responses to these challenges and heralding a new era for European innovation in microprocessors. European socio-economic stability depends on it. A new era is fast approaching, with the US authorities having decided to strike a major blow by making it very difficult to export certain semiconductors, even to allied countries, thereby depriving half of Europe’s countries of easy access to US technologies. The global microprocessor market is undergoing a profound transformation, driven by unprecedented technological advances and intensifying geopolitical competition. Once considered a niche industry, microprocessors have become the backbone of modern economies, enabling everything from smartphones to artificial intelligence systems, from IoT to cloud computing. The rise of Nvidia, a global leader in AI, underscores this changing ecosystem. The company is set to replace Intel in the Dow Jones Industrial Average (DJIA), who stated that the update aims to ensure “a more representative exposure to the semiconductors industry and the materials sector, respectively”. This dominance of a few global players underscores the challenges faced by other regions. While companies like Nvidia, AMD, and TSMC have set the standard for innovation, others—including once-mighty Intel—have struggled to keep up. Intel’s recent difficulties highlight the dynamic nature of the industry, where size and legacy alone no longer guarantee success. Instead, the ability to innovate, adapt, and secure supply chains is paramount. And initiatives are flourishing all around the world. As Europe works to bolster its presence in the microprocessor market, Latin America is emerging as a potential partner in the global semiconductor ecosystem. While the region does not yet have major microprocessor manufacturers, countries like Mexico and Brazil are becoming increasingly important in the broader supply chain. The United States, through initiatives such as the CHIPS Act, has sought to deepen its partnerships in Latin America, recognising the region’s strategic value for diversifying production and securing critical resources.  This should put Europe on alert. Indeed, the United States is planning on pushing forward with the development of microprocessor production capabilities across three Latin American countries: Mexico, Panama and Costa Rica. This strategy was unveiled by Secretary of State Anthony Blinken in July 2024 as the ‘Western Hemisphere Semiconductor Initiative.’ Indeed, Mexico is attracting billions in investments in its semiconductor and tech industries. Amazon, announced plans to invest $6 billion in the country by 2026, creating over 50,000 jobs. The Chinese government had identified semiconductors as a priority as early as 1956 and has already channeled an estimated $150 billion to its semiconductor industry. Latin America’s potential lies in its ability to complement the global microprocessor market with assembly, testing, and raw material processing capabilities. Though the region has yet to produce a major semiconductor design firm, its role in the supply chain could expand as global players look to reduce dependency on Asia. This creates opportunities for regional collaboration and investment in the sector while strengthening US access to semiconductors. Indeed, Secretary of State Anthony Blinken stated: “By improving the backbone of our supply chains, better infrastructure will help ensure that the goods our people rely on – semiconductors, electric vehicle batteries, medical supplies – are more affordable, more secure, and made right here in the Americas.” Incoming President Donald Trump’s planned tariffs on foreign imports could however have a real effect on tech giants’ outsourcing of manufacturing to Latin America, though. Even the Biden administration, a few days before its term, has decided to raise the stakes on microprocessors by further tightening sanctions against China. This illustrates the great sensitivity of the subject on the other side of the Atlantic and the need for Europe to rearm itself on the industrial front. Europe’s position in the microprocessor market remains precarious, and without sufficient scope for nearshoring and the development of a robust EU-focused development ecosystem, it could find itself falling way behind global competitors. Historically reliant on foreign suppliers for semiconductors, the region has recognised these strategic risks of this dependency. For Europe, this means creating an ecosystem in which innovative startups and new, EU-based technological initiatives are allowed to flourish. That’s the objective of the European Union’s “Chips Act”, which aims to increase local production capacity and support the development of homegrown technology. However, achieving these goals requires more than policy—it demands the emergence of innovative companies capable of competing on a global scale. Europe already has some important technological “links”, but not yet the whole chain. Among those links of emerging players is SiPearl, a French company specialising in the design of high-performance microprocessors. While still small compared to global giants, SiPearl represents a concrete step toward reducing Europe’s technological dependency. Its processors, designed for use in data centres and supercomputing, align with Europe’s strategic goals for technological sovereignty and innovation. SiPearl’s reliance on Taiwanese manufacturing reflects the broader global interdependence of the microprocessor market, but its designs are uniquely European, tailored to meet the region’s regulatory and security standards. The choice of Taiwan seems obvious at present, given that the processes used in Europe do not meet the requirements. Alternative foundries may be needed, such as Samsung, which has production capacities in South Korea and the USA, or even Intel. Indeed, this Eurocentric approach is at the heart of the firm’s strategy for development. CEO Philippe Notton underscores how the Chips Act does not go far enough in supporting start-up firms like his own: “the European Chips Act is a good start. If we manage to mobilise more public funds in the semiconductor sector to get things moving again, as is being done in most countries, that will be a positive thing.” Notton, like many in the sector, believes that startups are, however, being left behind by this policy. Nonetheless, there are some positive initiatives to support the objectives of the European Chips Act, such as the $3.2 billion investment by Silicon Box to build a semiconductor plant in northern Italy. This announcement was made last March by the Italian Minister of Enterprises, who was happy to show that Italy can “attract the interest of global technology players”. Europe is focusing on fostering innovation and reducing dependency through public-private partnerships. SiPearl is a prime example, but it is not alone. Other European companies, such as Infineon Technologies (Germany) and STMicroelectronics (a Franco-Italian firm), are making significant contributions to the semiconductor industry. MELEXIS, another firm based in Belgium, plays a critical role in developing specialized chips for the automotive industry, supporting Europe’s push for technological sovereignty in key sectors. This approach has also supported the growth of companies such as ASML in the Netherlands, a global leader in lithography machines essential for microprocessor manufacturing, and GlobalFoundries in Germany, which operates one of Europe’s most advanced semiconductor fabrication facilities. CEO Dr. Thomas Caulfield, has a more positive outlook, and emphasised Europe’s strategic position in the semiconductor industry, particularly highlighting the continent’s leadership in lithography through companies like ASML. He stated:  “Europe shouldn’t worry over issues of technology leadership for two reasons. One: You can’t do anything in semiconductors without lithography and Europe has ASML the leader in lithography. Nobody can do anything in semiconductors without giving capex to ASML, so Europe has great control of the semiconductor industry.” This highlights the multilateral ecosystem many are trying to develop in Europe, because together, these firms demonstrate the continent’s potential to become a hub for advanced microprocessor design and production. The microprocessor market is at a crossroads, offering Europe distinct opportunities to redefine its role in the global technology ecosystem. Success, however, will depend on sustained investment, strategic partnerships, and bold innovation. By leveraging its strengths, Europe can be both a leading player in design and manufacture as it used to be just a few decades ago. The opportunities are massive, but so are the risks of falling behind. The rewards of such efforts are, however, substantial: enhanced economic growth, greater technological sovereignty, and a pivotal role in shaping the future of the global microprocessor industry. The text of this work is licensed under  a Creative Commons CC BY-NC 4.0 license.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском From January 20 to 24, 2025, the traditional World Economic Forum (WEF) took place in Davos. The organizers registered approximately 2,000 participants from over 130 countries, including around 1,600 executives from major corporations, among them 900 CEOs. The political agenda of the WEF was supported by more than 50 heads of state and government. As part of the official program, about 300 sessions were held, 200 of which were broadcast live. Press accreditation was granted to 76 media companies. For official events, 28,043 square meters of space were allocated, accommodating 117 meeting rooms and 23 lounge areas. Additionally, several participating companies (such as HSBC, EY, and Cognizant) rented additional venues separately for their own events. WEF President Børge Brende, announcing this meeting, emphasized that in 2025, due to geopolitical conflicts, ongoing economic fragmentation, and the acceleration of climate change, the forum would be held under conditions of exceptionally high global uncertainty for the first time in decades. The theme of the Forum was “Cooperation in the Age of Intelligence”. On January, WEF experts presented four reports. The first one, a traditional report and the 20th edition, analyzed the most significant global risks and threats facing the international community. The study is based on a survey of over 900 experts from various fields and covers short-term (2025), medium-term (until 2027), and long-term (until 2035) perspectives. The key risks identified for these periods include the following:- in 2025 the most serious threat for most respondents is interstate armed conflicts, followed by extreme weather events and geoeconomic conflicts, including sanctions and trade measures;- by 2027 key risks include disinformation and fake news, which undermine trust in institutions and intensify social polarization, tension, and instability, as well as an increase in cyberattacks and espionage cases;- by 2035 environmental threats are a major concern, including extreme weather events, biodiversity loss, ecosystem destruction, critical changes in Earth's systems, and natural resource shortages. Additionally, technological risks such as the negative consequences of artificial intelligence and other advanced technologies are highlighted.The authors emphasize the need to strengthen international cooperation and increase resilience to global threats. According to them, rising geopolitical tensions, climate challenges, and other risks require coordinated global action to prevent the escalation of existing issues and the emergence of new crises. The second report presents the perspectives of leading experts on the global economic outlook for 2025. They predict moderate economic slowdown, driven by geoeconomic fragmentation and protectionist measures. The most resilient economic growth is expected in the United States and South Asian countries, while Europe, China, and Latin America may face significant challenges. Inflation is projected to rise in most countries, primarily due to increased government spending and shifts in global supply chains. Most experts consider a further escalation of the U.S.-China trade war likely, along with continued regionalization of global trade, leading to the formation of more isolated economic blocs and reduced global interdependence. While experts acknowledge the high potential of artificial intelligence (AI), they emphasize the need for greater investment in infrastructure and human capital to fully leverage its benefits. The third study provides a comprehensive analysis of employment issues. The main conclusion is that ongoing changes, global trends and new technologies will cause 92 million people to leave the labor market worldwide by 2030, but will also create 170 million new jobs. One of the challenges in this regard is the need to improve skills and train for new specialties. The fourth report assesses the state of global cooperation across five key areas: trade and capital, innovation and technology, climate and natural capital, health and well-being, and peace and security. After analyzing more than 40 indicators, the authors conclude that due to heightened geopolitical tensions and instability, overall cooperation remains at the same level. However, positive trends are observed in areas such as climate, innovation, technology, and health. Davos as a Symbolic Benchmark of Switzerland Despite existing criticism, the Davos Forum remains a key platform for the annual interaction of leading figures in global politics, business, and the expert community. Without Switzerland's neutral status, the Davos Forum likely would not exist. However, it was Klaus Schwab, who founded the World Economic Forum (WEF) on January 24, 1971, who played a crucial role in transforming this event and its host location into one of Switzerland’s comparative advantages in political and economic terms. Despite his advanced age, Schwab continues to be an active ideologue and architect of Davos, moderating key discussions while fine-tuning his creation and addressing annual criticism. Yet, he has his own limitations—despite Switzerland’s neutrality and his personal reputation for impartiality, Schwab once again refrained from inviting Russian representatives, even at the level of individual entrepreneurs and experts. Such a move, rather than formal attempts to broaden participation and accessibility, could have enhanced the forum’s status. The participation of a Russian delegation would have been particularly relevant in this critical year for global politics, marked by the unpredictable presidency of Donald Trump, which is set to shape most geopolitical and geo-economic processes worldwide. Including Russian representatives could have strengthened the WEF’s competitive standing, but once again, it did not happen. The Swiss leadership highly values the opportunities that the Davos platform provides, particularly in the realm of foreign policy and, most notably, foreign economic relations. In September 2024, both chambers of the Swiss Parliament—the Council of States (the smaller chamber) and the National Council (the larger chamber)—decided to continue state support for the World Economic Forum (WEF) in Davos and allocated budget funding for the period 2025–2027. During the discussions, lawmakers emphasized that the event strengthens Switzerland’s role as a global hub for international dialogue, while also having a positive economic impact on the Graubünden region. As the host country of the forum, Switzerland actively leverages it to advance its own interests. This year, six out of the seven members of the Swiss Federal Council (Cabinet of Ministers) attended the WEF. As part of the European Free Trade Association (EFTA), Swiss Economy Minister Guy Parmelin signed free trade agreements (FTAs) with Kosovo and Thailand, bringing Switzerland’s total number of FTAs to 37. There are also plans to adapt and update the existing FTA with China. One of Bern’s key priorities remains securing an FTA with the MERCOSUR bloc. As a result, a focal point of this year’s WEF was Argentine President Javier Milei, who, during an “exceptionally warm bilateral meeting,” invited Swiss President Karin Keller-Sutter to visit Buenos Aires in 2025. The Trump Factor The opening of the current WEF coincided with the inauguration of Donald Trump, who, in recent months, has made numerous provocative statements and promises, swiftly beginning their implementation upon taking office on January 20. The U.S. president signed nearly 100 executive orders, including the repeal of 78 regulations enacted by his predecessor, Joe Biden. Among these were directives for all federal agencies and departments to address rising living costs and to end government-imposed censorship of free speech. The most significant orders included the U.S. withdrawal from the Paris Climate Agreement and the World Health Organization, as well as the declaration of a state of emergency at the U.S.-Mexico border to enforce strict immigration controls. In one way or another, the presence of the “new-old” president was felt across nearly all discussion platforms at the forum. On January 23, Donald Trump addressed the participants of the Davos Forum via video conference, outlining the following agenda:- NATO defense spending: Member states should increase their defense budgets from 2% to 5% of GDP to ensure a more equitable distribution of financial burdens within the alliance.- Trade tensions with the EU: The EU and its member states treat economic relations with the U.S. unfairly. European business regulations, including tax policies, disadvantage American companies, particularly in the tech sector, prompting Trump’s call for tariffs on European imports.- Criticism of the EU’s Green Deal: Labeling it as a “new green scam”, Trump emphasized that the U.S. would ramp up oil and gas production and expand power plant construction to become the “capital of artificial intelligence and cryptography”.- Oil prices and the Ukraine conflict: Trump suggested that lower oil prices from Saudi Arabia could help resolve the Ukraine conflict and urged Saudi leadership to take necessary steps, emphasizing their responsibility in the matter.- Tariffs on companies outsourcing production: Countries whose companies manufacture outside the U.S. will face tariffs to incentivize production relocation to American soil.- China's role in Ukraine: Trump called on China to support ending the Ukraine conflict, while stating his own efforts to mediate a peace deal between Russia and Ukraine.- U.S. domestic policy shift: A large-scale deregulation program is underway in the U.S., including tax cuts and potential elimination of diversity, equity, and inclusion (DEI) initiatives, which Trump views as discriminatory.Trump’s speech elicited mixed reactions among forum participants. His focus on protectionist policies and sharp criticism of international partners raised concerns about potential consequences for the global economy, particularly among European attendees. Additionally, his stance signaled an escalation in the strategic rivalry between Washington and Beijing, which is expected to play out through potential trade conflicts, tensions in the South and East China Seas, continued arms sales to Taiwan, and other geopolitical developments. The Europe Factor   At Davos, Europe is traditionally represented by the European Union, with the United States as its primary political and economic partner. Ursula von der Leyen, re-elected as President of the European Commission and beginning her new term on December 1, 2024, addressed the forum on January 21. Her speech largely responded to challenges outlined by Donald Trump before the WEF began, setting out the EU’s key priorities for the coming years: overcoming economic stagnation, enhancing competitiveness, and further integrating the single market across all 27 member states. A central theme of her address was the “Competitiveness Compass” initiative, first introduced in late 2024. This strategy, shaped by recommendations from Mario Draghi’s influential report, aims to drive economic reform and growth within the EU. The European Commission planned to unveil the full document by the end of January. At Davos, Ursula von der Leyen effectively introduced the concept of “Europe United” as a counterbalance to “America First” and cautioned the U.S. against igniting a trade war with the European Union. She emphasized the importance of early engagement and dialogue on shared interests, stating: “Our priority will be to initiate discussions as early as possible, focusing on common interests and readiness for negotiations. We will be pragmatic, but we will always adhere to our principles. Protecting our interests and defending our values is the European way”. At the same time, the European Commission president highlighted the high level of interdependence between the European and American economic models. She underscored that the era of global cooperation has given way to intense geostrategic competition, stating: “The world's largest economies are competing for access to raw materials, new technologies, and global trade routes—from artificial intelligence to clean technologies, from quantum computing to space, from the Arctic to the South China Sea. The race is on”. Christine Lagarde, President of the European Central Bank (ECB) emphasized that Brussels must be prepared for U.S. trade tariffs which are expected to be more “selective and targeted”, especially given the “existential crisis” facing the EU economy. She also noted that the ECB is not overly concerned about the impact of inflation from other countries, including the U.S., on the eurozone. The UK was also represented at Davos, with its delegation led by Chancellor of the Exchequer Rachel Reeves. She used the trip primarily to promote Britain’s economic landscape, focusing on the country’s political and economic stability, its business-friendly environment, and recent government efforts to reduce regulatory barriers—all under the central message: “Now is the time to invest in Britain”. However, the extent to which this narrative aligns with reality remained beyond the scope of the Forum. The true assessment was left to the executives of major corporations with whom Reeves held meetings, including JPMorgan and Goldman Sachs, discussing investment opportunities in the UK's infrastructure and green projects. Additionally, the UK delegation engaged in negotiations aimed at restoring and strengthening ties with sovereign wealth funds and private investors from the U.S. and the Gulf states. The Ukraine Factor Due to the ongoing Ukraine conflict, Davos once again served as a prelude to the Munich Security Conference, which traditionally takes place in early February in Bavaria. While the war and Donald Trump’s influence shaped many discussions, Ukraine was not the central focus of the forum, resulting in a somewhat reduced emphasis compared to previous years. Ukraine’s interests at the World Economic Forum (WEF) were primarily represented by V.Zelensky, who took it upon himself to “educate” European politicians and “interpret” the signals previously sent by Donald Trump. His focus was on defense spending, emphasizing that a significant portion should go toward supporting the Kyiv regime, the presence of foreign troops on Ukrainian territory, and the need for “real security guarantees”. In the first days after taking office, the U.S. president made several key clarifications regarding his previously stated 24-hour timeline for resolving the Ukraine conflict — this period has now been significantly extended. The reason lies in the fact that, regardless of the revocation of Zelensky’s well-known decree, Ukraine must have a head of state authorized to negotiate and officially confirm any agreements or their outcomes. As of late January, no such figure was present in Kyiv, and Washington is aware of this reality. Switzerland, while emphasizing its neutral status (despite being designated by Russia as an “unfriendly state”), consistently maintains that it provides Ukraine only humanitarian aid and diplomatic support at Kyiv’s request. At the 2024 WEF, the well-known Bürgenstock Conference was announced, which later took place in the summer. However, in 2025, no similarly large-scale initiatives were introduced. Nevertheless, discussions at the Forum once again touched on the possibility of granting Switzerland the right to represent Kyiv’s interests on the international stage. Additionally, it was reported that a Swiss-Ukrainian memorandum was signed, with Ukrainian Economy Minister Yulia Svyrydenko representing Kyiv. The agreement focuses on the participation of Swiss private businesses in Ukraine’s reconstruction efforts. V.Zelensky used Davos as an opportunity to meet with world leaders, including German Chancellor Olaf Scholz, who had recently blocked additional aid to Ukraine. However, his main competitor in Germany’s upcoming snap Bundestag elections, Friedrich Merz, was more open to the idea of support, and Zelensky also held a discussion with him. Both meetings were held behind closed doors, and no details were disclosed. Meanwhile, German Green Party leader Robert Habeck managed to avoid an impromptu conversation with Zelensky, who had attempted to engage with him on the spot. At a January 23 briefing, Russian Foreign Ministry spokesperson Maria Zakharova commented on V.Zelensky’s speeches at Davos 2025, describing them, among other things, as “narcotic madness”. The Germany Factor Germany, still holding its position as the political and economic leader of the European Union, was represented at Davos by key political heavyweights: Chancellor Olaf Scholz, Economy and Climate Protection Minister (and Vice-Chancellor) Robert Habeck, and CDU/CSU Chairman Friedrich Merz. All three have been selected by their respective parties as key candidates for chancellor in Germany’s snap Bundestag elections scheduled for February 23, 2025. Given this, it was no surprise that they used the Swiss platform as part of their election campaigns. The current head of the German government had an objective advantage: he delivered a keynote speech on behalf of Germany, in which he focused on the presence of traditional standard factors (the largest economy in the EU; efficient small, medium and large businesses; government support for investments; low level of government debt), which should help to overcome the crisis. Regarding the United States, he declared his interest in maintaining close relations with the new administration, but “without false fawning and servility”. D. Trump and his team, according to him, will keep the whole world on edge in the coming years, but the German leadership will be able to cope with this. O. Scholz's main message is that constructive European-American interaction “is of decisive importance for security throughout the world and is the engine of successful economic development”. It is noteworthy that there were many empty seats in the hall and after the Chancellor's speech there were no questions for him for a long time, which greatly surprised the moderator of the session, K. Schwab. O. Scholz's closest associate, Finance Minister J.Kukis, who was appointed to this position to replace K. Lindner, who was dismissed in early November 2024, was participating in the Forum. He was unable to provide any special pre-election support to his boss during the Forum, and did not distinguish himself in any special way. Incidentally, K. Lindner himself preferred to remain in Germany and continue to fight there for the votes of voters, which are extremely necessary for the liberals to overcome the five percent barrier and get into the Bundestag. F.Merz, who is very likely the future head of the German Cabinet, and his possible future deputy R. Habeck also sought to prove their chances of winning the elections during their speeches. O. Scholz and F.Merz organized meetings with leading representatives of German business, trying to show which of them understood their problems better and was ready to solve them constructively. Despite all their differences, they were united on one issue - the need to soften the provision on the “debt brake” enshrined in the Basic Law (Constitution) and increase support for entrepreneurs. External observers considered that F.Merz was more convincing, including regarding the transatlantic economic vector. R.Habeck unexpectedly engaged in self-criticism during the podium discussion, stating that he initially believed that the difficult economic situation in the country was due to a short-term cyclical crisis, but it turned out that this was a consequence of a long-term structural crisis. Such “self-education” of the minister cost Germany dearly. During the Forum (January 22) in the Bavarian town of Aschaffenburg, an Afghan refugee subject to deportation committed a crime, killing a child and an adult who was protecting him. This event pushed the issue of migration regulation to the top of the election campaign agenda. Unexpectedly, F.Merz found himself in a sticky situation, when his parliamentary request as the leading representative of the opposition in the current Bundestag for stricter controls at the external borders of the FRG could only count on success with the support of the unpopular Alternative for Germany and the center-left Sahra Wagenknecht Union. From Davos, Olaf Scholz traveled to Paris for a meeting with Emmanuel Macron. The French president was unable to attend the Forum due to domestic political circumstances and the need to manage the situation on the ground. The two leaders discussed the prospects for cooperation between their countries in strengthening their economic and political frameworks, as well as the European Union as a whole. None of the three key chancellor candidates managed to present a clear vision for Germany’s economic and political future, one that would be based on creativity, radical progress, technological breakthroughs, and prosperity—transforming the country into an innovation powerhouse not only for Europe but for the collective West as a whole. This means that Germany risks falling behind, failing to establish itself as an economic model capable of competing on equal terms with Donald Trump’s transforming North American economic space.Under Friedrich Merz, Olaf Scholz, and Robert Habeck, Germany faces the danger of remaining trapped in the past, relying too heavily on its post-war economic miracle—Made in Germany—which was achieved through the brilliance of ordoliberal economists and engineers. Davos 2025 made it clear that leaning solely on past achievements is no longer enough to drive a radical leap toward the future. If the German political elite, represented by the “handshake” established parties, remains in such reactionary positions in relation to the need for qualitative changes in economic policy, then the German standard will have no chance to take a leading place among the world's innovation locations. Here we will briefly indicate that, according to the estimates of the authors of the global risks report, the main ones for Germany are (in descending order): a shortage of highly qualified labor, recession / stagnation of the economy, illegal migration, disinformation, and a shortage of energy resources. They are the ones that largely determine the content of the current election campaign for the German parliament. The China Factor Among the political heavyweights representing the countries of the Global South at Davos 2025, the participation of the Chinese delegation, led by Vice Premier of the State Council of the People's Republic of China Ding Xuexiang, stands out. In his keynote speech, he emphasized Beijing's commitment to economic globalization, which is “not a zero-sum game, but a process of mutual benefit and common progress” and declared that protectionism does not lead to success, and trade wars have no winners. Among the key messages were that China is economically attractive, does not seek a trade surplus, is ready to import more competitive and high-quality goods and services to achieve balanced trade, is open to investment from foreign companies, and is ready to solve problems faced by both domestic and foreign firms. While condemning protectionism, he emphasized the importance of multilateralism and the role of the UN. While mildly critical of the “new-old” US president, he never mentioned him by name. Ding repeatedly referred to Xi Jinping, including his initiatives on global development and security. As part of the Forum, Ding Xuexiang hosted a private luncheon with top global financiers and business leaders, including the CEOs of BlackRock, Bridgewater Associates, JPMorgan, Blackstone, and Visa. Discussions centered on China’s ongoing economic reforms, efforts to stabilize the real estate market, stimulate domestic demand, and attract foreign investment. Experts noted that global business leaders responded positively to Ding Xuexiang’s statements, signaling growing confidence in China’s economic direction. In general, he fulfilled the standard mission assigned to him: to increase the international community's confidence in China's economic policy and confirm its role as a key player in the global economy. At the same time, the Forum participants remained concerned about a slowdown in China's economic growth, especially in the context of a possible increase in tariffs by the United States. The Artificial Intelligence Factor One of the leitmotifs of the forum, along with rethinking economic growth, industrial development prospects, climate and restoring trust, were discussions on the rapid development of AI, its impact on the labor market, prospects and challenges associated with the integration of this technology into various sectors of the economy. Experts identified a few trends that will emerge by 2030. AI and automation will increase the demand of enterprises for specialists in the field of AI, big data analysis, digital marketing, and cybersecurity. About half of the current skills of such employees in these areas may become obsolete, which suggests the need for timely adaptation of secondary and higher education to such a challenge. Employees whose professions will become unclaimed due to automation, especially in traditional sectors, will have to undergo advanced training programs. Special attention in the expert sessions was given to the ethical aspects of AI application and the related problems of developing the necessary standards. Issues of international cooperation took an important place, including in the context of ensuring a fair distribution of the benefits of AI application, as well as minimizing the potential risks it generates for society (for example, possible discrimination and bias in algorithms, as well as the protection of users' personal data). In terms of geopolitical rivalry in the field of AI, the global race for leadership in this area, which has already begun between the United States, China and several EU countries, was discussed. Experts pointed out the concerns of the leaders of the latter regarding the need to strengthen the positions of European companies in this area. Strategies for government stimulation of innovation and support for businesses developing AI were discussed. In addition, the participants in the discussions considered the possibilities of using artificial intelligence technologies to achieve sustainable development goals, including combating climate change, improving healthcare and increasing resource efficiency. Examples of using AI to monitor the environment, optimize energy consumption, develop new methods of treating diseases, and improve various aspects of life were of interest. *** The World Economic Forum 2025 in Davos was predictably held under the sign of global challenges, the Ukraine conflict, and increased economic competition, set against the backdrop of geopolitical and geoeconomic changes. Børge Brende, summarizing the event, accurately noted that the current time is “a moment of serious consequences and uncertainties”. This is largely linked to the return of Donald Trump to the White House. At the Forum, the United States’ priorities in strengthening national interests were outlined, including the goal of reducing import flows. This move drew criticism from the European Union and other participants, who expressed growing concerns about the escalation of trade conflicts and the fragmentation of the global economy. The President of the European Commission highlighted the prospects for strengthening the EU’s competitiveness and increasing its independence, considering the intensifying rivalry between the American and Chinese economic spheres. In this regard, representatives of China advocated for reducing trade tensions and strengthening regional alliances, while Germany emphasized the current risks facing its economic standard, outlining the difficulties of finding ways to minimize them. The Ukrainian conflict once again became one of the central topics, but with the formal support of the leaders of the collective West, delegations from the global South showed a restrained reaction to V.Zelensky's speech and messages. Discussions about AI became quite meaningful. Overall, Davos 2025 and its participants confirmed the important role of the WEF as a platform for discussing global challenges and finding constructive answers to them. The need for collective efforts to solve the most pressing issues was noted. One of B. Borge's final messages: the only way to achieve progress in solving global problems is to work together and “find solutions that will make the world a better place”. It is evident that Russia could have significantly contributed to enhancing the effectiveness of this approach.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском The Paris Agreement will be ten years old in 2025. It is a good opportunity, then, to reassess the feasibility of its long-term goals and understand what they mean for the current and for the next generations. In a very optimistic scenario, if the goals of the Paris Agreement are achieved, the climate crisis will have been solved by the end of the 21st century. In the meantime, though, the crisis will worsen, as temperature overshoot is very likely to occur by the middle of the century. During the overshoot period, our planet’s average temperature exceeds 1.5°C above pre-industrial levels, which is the threshold proposed by the Paris Agreement. At the end of the overshoot period, which could last from one to several decades, the temperature will begin to fall until it eventually stabilises at 1.5°C at the turn of the century (IPCC 2023, 1810). Expectedly, the success of the Paris Agreement would greatly benefit the “post-overshoot generation”, namely the generation that will live in the first half of the 22nd century. But to ensure the success of the Paris Agreement, the generation that will live in the overshoot period – the “overshoot generation” – will have to remove an enormous amount of GHG (Greenhouse Gases) from the atmosphere. For now, though, it is unclear whether CCS (Carbon Capture and Storage) technologies will be available at a scale that might enable the overshoot generation to achieve the long-term goals of the Paris Agreement. To aggravate the problem, the overshoot generation will also probably have to rely on as-yet untested geoengineering technologies to promote their own survival. As we can see, conflicting interests of three different generations are at stake here, namely: (1) the interests of the current generation, (2) those of the overshoot generation, and (3) the interests of the post-overshoot generation. Given the unequal distribution of power across generations (Gardiner 2011, 36), it is likely that the current generation will tend to further their own interest to the detriment of the overshoot generation, even if, in the end, the climate policies enforced by the current generation do indeed fulfil the interests of the post-overshoot generation. The best possible world is one in which the goals of the Paris Agreement are achieved. Yet, depending on the choices that we make today, the best possible world could also mean the worst possible world that human beings will ever have met on our planet. That will be the fate of the overshoot generation, squeezed between the self-serving policies of the current generation and the climate hopes of the post-overshoot generation. The implications for international relations are momentous, as we intend to show in this article. Possible pathways The Paris Agreement did not establish a concrete deadline for the achievement of the goals set out in Article 2, namely: Maintain the increase in the global average temperature well below 2°C above pre-industrial levels, and make efforts to limit this temperature increase to 1.5°C above pre-industrial levels, recognising that this would significantly reduce the risks and impacts of climate change. The scientific community generally understands that the Paris Agreement aims at climate stabilization at the end of the 21st century. There are two main reasons for this. The first is a constraint imposed by our planet’s climate system. The second is a constraint imposed by agreed upon principles of justice. As for the first reason, we have to bear in mind that an immediate reduction of GHG emissions would not be followed by an immediate decline of global temperature (Dessler 2016, 91). Even if all countries decided to eliminate their respective emissions today, the global temperature would continue to rise for several decades, until it begins to recede and stabilises at the turn of the century. As for the second reason, the Paris Agreement assumed that developing countries could not immediately reduce their own emissions without compromising their own development and the prospect of eradicating poverty. Thus, the Paris Agreement also established in Article 4 that each country could continue to emit GHG until their respective emissions peaked as soon as possible. After peaking, emissions should be rapidly reduced. Thus, the attempt to achieve the goals set out in Article 2 well before the end of the 21st century might turn out to prove inconsistent with the reality of our planet’s climate system and unfair towards developing countries. The problem, however, is that the Paris Agreement did not establish a specific pathway for the achievement of its long-term goals (Figure 1). There is, indeed, a multitude of pathways, but many (if not most) of them involve an overshoot period (Geden and Löschel 2017, 881; Schleussner et al. 2016). And as there are “different interpretations for limiting global warming to 1.5°C”, there emerges the question, then, as to which interpretation could do justice to the conflicting claims of the three different generations considered as a whole, namely the claims of the current generation, those of the overshoot generation, and the claims of the post-overshoot generation (Figure 2). There has been much discussion now on the concept of a “just transition”. But this debate has focused entirely on the claims that the members of the current generation can raise against each other, and not on claims that could be raised – or presumed – across the three generations referred to above. The IPCC (Intergovernmental Panel on Climate Change) Glossary from 2023, for instance, contains a specific entry on this topic: “Just transitions. A set of principles, processes and practices that aim to ensure that no people, workers, places, sectors, countries or regions are left behind in the transition from a high-carbon to a low carbon economy” (IPCC 2023, 1806). The IPCC entry ends with some considerations regarding past generations: “Just transitions may embody the redressing of past harms and perceived injustices”. Interestingly, though, the entry says nothing about the normative implications of a just transition for future generations. A 2023 United Nations document defines the concept of just transition along similar lines (United Nations Economic and Social Council 2023, 3, 12–13). But, again, it understands “just transition” in terms of claims that stakeholders within the current generation, whether at national or international level, can raise against each other. As for the international level, the United Nations document makes the following statement concerning the concept of just transition as applied to international relations: “As countries pick up the pace of their climate change mitigation strategies, it is critical that developed countries do not transfer the burden of the transition onto developing countries” (United Nations Economic and Social Council 2023, 8). The problem, however, is that, as a matter of justice, it is equally critical that the current generation does not transfer the burden of the transition onto the overshoot generation, even if that burden, in the end, turns out to benefit the post-overshoot generation. Such an unequal distribution of burdens across three generations would certainly conflict with the requirements of intergenerational justice (Moellendorf 2022, 161–70; Meyer 2021). Overshoot generation and retroactive mitigation One might perhaps argue that no extra burden is being imposed on the overshoot generation, for the current generation is already having to face challenges that the overshoot generation, supposedly, will not have to face. The overshoot generation, one might suggest, will inherit from the current generation all the benefits resulting from the energy transition, but without having to bear the costs that the transition imposes on the current generation. The idea here is that by the middle of this century global emissions will have already peaked and will be declining at an accelerated pace, towards stabilisation at 1.5°C above the pre-industrial level at the end of this century. Thus, the overshoot generation can arguably reap the benefits of green energy, as long as the current generation remains free, at least for the time being, to emit GHG further, which is necessary to finance the human and technological development that the overshoot generation will need later. This claim, however, overlooks a crucial fact about the climate crisis – a fact that has not been given due attention in the public debate on climate policies. In a very optimistic scenario, the overshoot generation will not have the burden of reducing their own emissions because they will be able to rely on carbon-free energy. The problem, however, is that the overshoot generation will still have to retroactively mitigate the emissions of previous generations – including, of course, the emissions of the current generation. We call this process “retroactive mitigation”, for what is at stake here is not reduction and phasing out of one’s own emissions, but the removal of massive amounts of GHG, which previous generations failed to mitigate in the past. In a 2014 report, the IPCC realised that simply reducing GHG emissions would no longer be enough to preclude irreversible climate change. Removal of GHG would also be necessary (IPCC 2014, 12). The IPCC called attention to yet another problem: it was unclear whether CCS (Carbon Capture and Storage) technologies, including DAC (Direct Air Capture), could be deployed on a global scale in time to avoid a climate disaster. In a 2018 report, the IPCC was even less confident about the future development and scaling-up of CCS technologies (IPCC 2018, 136). To make matters worse, two further factors must be taken into consideration. (1) Recent studies show that there are practically no pathways left for the achievement of the Paris Agreement goals without the massive deployment of CCS (Smith et al. 2023). And (2) it has become increasingly probable that the overshoot generation will also have to deploy geoengineering technologies to cope with ever more frequent heatwaves (Moellendorf 2022, 161–70). It could perhaps be argued that afforestation and preservation of existing forests could be used instead of CCS technologies. However, the amount of land and water that would be necessary for the creation of new forests is probably larger than the amount of land and water available. Moreover, the attempt to create new forests on such a large scale might compromise the water and food security that the overshoot generation will need to promote their own climate adaptation (Shue 2017, 205). It is also necessary to take into account the amount of time new forests need to grow, not to mention the risk of fire. In this case, forests stop absorbing GHG and become GHG emitters themselves (Gatti et al. 2021). Implications for international relations In the aftermath of the Second World War, human being’s capacity to trigger catastrophic events at a global scale became increasingly apparent. As Garrett Hardin aptly put the problem in 1974: “No generation has viewed the problem of the survival of the human species as seriously as we have” (Hardin 1974b, 561). But while even realist thinkers such as Hans Morgenthau and John Herz argued for international cooperation in the face of global threats, Hardin himself advanced what he called the “lifeboat ethics”. According to Hardin, instead of engaging in international cooperation, richer states should behave like lifeboats and resist the temptation to help individuals from poorer states to cope with environmental disasters or famines. This, he argued, might undermine richer states’ capacity to secure their own survival (Hardin 1974a; 1974b). In his The Limits of Altruism: An Ecologist’s View of Survival from 1977, Hardin resumes his criticism of international cooperation to alleviate the plight of poorer states: We will do little good in the international sphere until we recognize that the greatest need of a poor country is not material: call it psychological, moral, spiritual, or what you will. The basic issue is starkly raised in a story of personal heroism that unfolded in South America a few years ago (Hardin 1977, 64). Hardin goes on to recall the 1972 Andes plane crash, turned into a feature film in 2023. Hardin suggests that the passengers who had survived the crash would not have taken the initiative to save their own lives had they not heard on the radio that the search efforts to rescue them had been called off. Hardin’s conclusion is this: “This true story, I submit, bears a close resemblance to the moral situation of poor countries. The greatest gift we can give them is the knowledge that they are on their own” (Hardin 1977, 65). Hardin, of course, does not take into consideration the extent to which richer states themselves may be responsible for the plight of poorer states. Hardin’s self-help approach to international relations is in line with political realism. But when major realist thinkers themselves addressed the question of human survival, around the same time Hardin advocated his lifeboat ethics, they came to entirely different conclusions. Authors such as Morgenthau and Herz realized that nation-states had become unable to protect their own citizens in the face of global catastrophes triggered by the depletion of the environment or the outbreak of a nuclear war. As Morgenthau put the problem in 1966: “No nation state is capable of protecting its citizens and their way of life against an all-out atomic attack. Its safety rests solely in preventing such an attack from taking place” (Morgenthau 1966, 9). In a 1976 article on the emergence of the atomic age, Herz made a similar point: “Nuclear penetrability had rendered the traditional nation-state obsolete because it could no longer fulfill its primary function, that of protection” (Herz 1976a, 101). Both Morgenthau and Herz argued for international cooperation – or perhaps even the dissolution of the system of states (Morgenthau 1978, 539) – as the better strategy to avert global catastrophic risks (Herz 1976a, 110; 1976b, 47). Herz later also theorized about the concept of “ecological threat” and argued for the development of a new interdisciplinary field, which he aptly named “survival studies” (Herz 2003; Seidel 2003; Laszlo and Seidel 2006, 2–3; Graham 2008; Stevens 2020). During the overshoot period, as heatwaves and other climate-related extreme events become more severe and frequent, people in poorer countries are likely to suffer the most. Mass migrations are likely to occur on an unprecedented scale (Vince 2022). Given the current popularity of anti-migration measures both in the United States and Europe, it is imaginable, then, that the lifeboat ethics will strike a chord with future conservative governments. That would be an error, for the assumption that governments will be protecting their own citizens by way of making their borders impenetrable to climate migrants is misleading. The “ecological threat” cannot be held back by higher walls. Lifeboat ethics will make everyone worse-off. Back in the 1960s, Martin Luther King may not have had climate change or mass migration in mind, but his words strike us as even more poignant now: “We may have all come on different ships, but we’re in the same boat now” (as quoted by former American President Barack Obama). There is only one boat, carrying three generations of hopeful passengers with equal legitimate claims to a better climate. It is a long journey. Let us not allow our only boat to go down. Final remarks The scenario in which the overshoot generation will have to live is not an encouraging one, but it is even less inhospitable than the scenario that the post-overshoot generation will have to face if the goals of the Paris Agreement are not met. It is up to the current generation to make sure that the overshoot period is as short as possible, and that the overshoot generation will not only be in a position to adapt to unprecedented climate scenarios in the history of human civilization, but also fulfil hopes of the post-overshoot generation. Figures Figure 1: Pathways compatible with the goals of the Paris Agreement (IPCC 2018, 62). FIGURE01  Figure 2: Pathways that would limit global warming to 1.5°C (IPCC 2018, 160).   Acknowledgements Marcelo de Araujo thanks Prof. Darrel Moellendorf for the invitation and the Alexander-von-Humboldt Foundation for the financial support. Support for this research has also been provided by the CNPq (The National Council for Scientific and Technological Development) and FAPERJ (Carlos Chagas Filho Research Support Foundation). An earlier draft of this article was presented at the University of Graz, Austria, Section for Moral and Political Philosophy, in 2024, with thanks to Prof. Lukas Meyer for the invitation. Pedro Fior Mota de Andrade benefited from financial supported provided by CNPq (National Council for Scientific and Technological Development). References Dessler, Andrew Emory. 2016. Introduction to Modern Climate Change. Second edition. New York, NY, USA: Cambridge University Press. Gardiner, Stephen. 2011. A Perfect Moral Storm: The Ethical Tragedy of Climate Change. Oxford: Oxford University Press. Gatti, Luciana V., Luana S. Basso, John B. Miller, Manuel Gloor, Lucas Gatti Domingues, Henrique L. G. Cassol, Graciela Tejada, et al. 2021. ‘Amazonia as a Carbon Source Linked to Deforestation and Climate Change’. Nature 595 (7867): 388–93. https://doi.org/10.1038/s41586-021-03629-6. Geden, Oliver, and Andreas Löschel. 2017. ‘Define Limits for Temperature Overshoot Targets’. 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Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Western missteps in Africa are creating an opening for Russia to deepen its influence. Recent protests against International Monetary Fund (IMF)-imposed austerity measures have rocked several African states. Kenya, a long-time partner of the United States and a key contributor to UN peacekeeping operations in Haiti, experienced violent clashes between government security forces and anti-austerity protestors over tax hikes in a controversial finance bill. Simultaneously, many protesters saw Kenyan engagement in Haiti as footing the bill for American security interests while ordinary Kenyans struggled to make ends meet. Soon after, similar protests against IMF measures spread to Nigeria. Analysts and locals are concerned that spreading protests may threaten stability across Africa. Citizens of other countries continue to voice their displeasure with the political and economic status quo through protest (in Mozambique) and at the ballot box (in Botswana). IMF loans come with significant stipulations, including reforms to financial systems and governance. Critics of these conditions frequently malign the IMF as a violator of sovereignty. Changes to economic and governing models, combined with high debts and economic stress, increase the costs of everyday products and diminish purchasing power across the continent. To many ordinary citizens, the West is benefiting from the fruit of African resources while hindering Africans’ access to the global economy. Publics in these countries demand alternatives to IMF funding, protesting governments to oppose IMF-imposed austerity. Youth, an increasingly important demographic, are especially active. Many of these young people are college-educated but fail to secure adequately paid employment in skilled industries. The informal economy is growing but increasingly separated from formal and international economies. IMF austerity measures are driving the continent to economic crisis and protest that may have lasting effects anathema to US foreign policy and the liberal international order. Some already see China as a viable alternative, although public opinion of Chinese influence is mixed. Elsewhere, faded Cold War memories make Russia a relatively unknown economic and political alternative. So, while recent Western actions in Africa have put long term relationships at risk, Russia is slowly increasing its influence on the continent. In fact, the Kremlin has already taken action and is engaged in the politics surrounding the various debt crises in African nations. African countries owe debts to multiple international actors, including Russia. However, Moscow has forgiven debts owed by many of these countries, coupling debt relief with additional economic benefits, including an influx of grains and energy resources. It has also deepened defense cooperation with several African countries. This cooperation often includes contracts for weapons sales and the deployment of irregular military units, including the Wagner Group. Diplomatic actions such as the above have led some protestors to see Russia as a viable alternative to IMF funding and partnerships with the US and Europe. In a visual representation of this phenomenon, protestors have been seen waving Russian flags at mass gatherings across Africa. Russia appears to receive the greatest support in the Sahel, where governments have failed to curb political instability and deliver on economic development promises. Publics in the region were already angry with the continued postcolonial military presence of France, and Russia took advantage. Mass publics are not the only actors seeking alternatives, ruling elites also see Russia as an attractive partner. Russian defense cooperation and the presence of irregular forces bolster these regimes in the face of increasing civilian protests over poor governance or human rights. Still, Russia has not yet made the gains it could. The war in Ukraine is hurting Africans and contributing to economic stress as global grain prices have skyrocketed. Some perceive Russia as exacerbating the problems of failed governance through its use of Wagner Group formations to back corrupt officials, protect corporate interests, and bolster unpopular governments. Russian interest in the region is also less significant than in the Middle East, Eastern Europe, or the Arctic, where Russia has more proximate strategic, economic, and political goals. Rather than rushing in, Russia’s economic presence in Africa is slowly advancing Moscow’s goals on the international stage. When Russia sought to undermine financial, technological, and energy sanctions from the West as a result of its invasion of Ukraine, it turned to Africa to find new consumers for food products, energy, and arms. Already, in the wake of the invasion, only half of the continent voted to condemn Russia. Such voting patterns at the UN indicate greater support for Russia in Africa than in other regions around the world, even if distrust of Russia remains high in some parts of the continent. Forecasted crises could increase Russian influence on the continent as well. Shocks generated by the African debt crisis could become a proximate cause for geopolitical and geoeconomic shifts. Rapid demographic changes and disastrous climate events (e.g., droughts and floods) exacerbate existing economic and migratory challenges. Since the tentacles of Russian economic and security influence, as well as misinformation, are already present in Africa, such future crises could pull multiple African states further into Russian orbit, and away from Western countries and institutions. Further alignment of African states with Russia would have several drawbacks. Russia would discourage democratization and use security assistance to bolster dictators across the continent. Environmentally sustainable development is also likely to be hampered. Russia may increase the extraction of natural resources in environmentally damaging ways. Additionally, Russian energy exports will be oil and gas, eroding the already significant investment and progress in green energy development many African political economies have made. As Western missteps create openings for Russia to gain a foothold in Africa, they also set the stage for other global powers to capitalize on the vacuum. Chinese-built infrastructure in Africa also contributed to debt burdens, but unlike Western approaches tied to IMF austerity measures, China is recalibrating its strategy. By shifting to smaller projects with lower debt exposure and promoting green energy development overseas, China positions itself as a more appealing partner. This strategy not only bolsters China’s domestic solar and EV industries but also enhances its soft power by responding to local economic needs. Moreover, as Western policy blunders alienate African publics and governments, both Russia’s and China’s influence may grow. Russia’s gains in the region could indirectly strengthen China’s position by fostering broader skepticism of Western-led systems, aligning African leaders more closely with Beijing’s geopolitical goals, including its stance on Taiwan. Africa is a burgeoning continent. One in four humans will be African by 2050. If the US and Europe pass on opportunities to engage with a continent of emerging green development powers and an increasingly educated demographic bulge, Western policies will undermine their own power and influence in the international order. Russia’s quiet increase in trade and security assistance offers an established alternative. Meaning ultimately, both Russia and China, may play the long game, gaining incremental support from a region of one billion people at a time. This work is licensed under the Creative Commons Attribution 4.0 International License (CC BY 4.0) [add link: https://creativecommons.org/licenses/by/4.0/]

Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском “Changes! We’re waiting for changes!” proclaimed Viktor Tsoi nearly 40 years ago, at the dawn of the Soviet perestroika. If one were to summarize the multitude of diverse and contradictory events, trends, and sentiments of the past year in a single phrase, it would be that the modern world is eagerly awaiting change. Much like the former USSR in the 1980s, few today can clearly define what these changes should entail or what their ultimate outcome will be. Yet, the idea of maintaining the status quo has evidently found little favor with the public over the past year. This impatient anticipation of change was reflected, for instance, in the outcomes of numerous elections held over the past 12 months across the globe. In total, more than 1.6 billion people went to the polls, and in most cases, supporters of the status quo lost ground. In the United States, the Democrats suffered a resounding defeat to the Republicans, while in the United Kingdom, the Conservatives were decisively beaten by the Labour Party. In France, Emmanuel Macron's once-dominant ruling party found itself squeezed between right-wing and left-wing opposition, plunging the Fifth Republic into a deep political crisis. The seemingly stable foundations of political centrism were shaken in Germany, South Korea, and Japan. Even the party of the highly popular Indian Prime Minister Narendra Modi failed to retain its parliamentary majority after the elections, and in South Africa, the African National Congress led by Cyril Ramaphosa also lost its majority. Pessimists might argue that abandoning the status quo in itself solves no problems, and the much-anticipated changes, as the final years of the Soviet Union demonstrated, do not necessarily lead to positive outcomes. Replacing cautious technocrats with reckless populists often backfires, affecting those most critical of the entrenched status quo. Optimists, on the other hand, would counter that the rusted structures of state machinery everywhere are in desperate need of radical modernization. They would add that the costs inevitably associated with maintaining the existing state of affairs at all costs far outweigh any risks tied to attempts to change it. The international events of the past year are also open to various interpretations. Pessimists would undoubtedly point out that none of the major armed conflicts carried over from 2023 were resolved in 2024. On the contrary, many of them showed clear tendencies toward escalation. For instance, in late summer, Ukraine launched an incursion into the Kursk region of Russia, and in mid-November, the U.S. authorized Kyiv to use long-range ATACMS missiles against targets deep within Russian territory. Meanwhile, the military operation launched by Israel in Gaza in the fall of 2023 gradually expanded to the West Bank, then to southern Lebanon, and by the end of 2024, to parts of Syrian territory adjacent to the Golan Heights. From the optimists' perspective, however, the past year demonstrated that the disintegration of the old international system has its limits. A direct military confrontation between Russia and NATO did not occur, nor did a large-scale regional war break out in the Middle East, the Taiwan Strait, or the Korean Peninsula. The economic results of 2024 are equally ambiguous. On one hand, the global economy remained heavily influenced by geopolitics throughout the year. The process of “technological decoupling” between the U.S. and China continued, and unilateral sanctions firmly established themselves as a key instrument of Western foreign policy. On the other hand, the world managed to avoid a deep economic recession despite the numerous trade and investment restrictions. Global economic growth for the year is expected to reach around 3%, which is quite respectable for such turbulent times, especially considering that the long-term effects of the COVID-19 pandemic have not yet been fully overcome. In 2024, the average annual global temperature exceeded pre-industrial levels by more than 1,5 °C for the first time, crossing another critical “red line”. However, the UN Climate Change Conference (COP29) held in November in Baku fell short of many expectations. At the same time, China reached its peak carbon emissions by the end of the year, achieving this milestone a full five years ahead of previously announced plans. In the past year, the UN Security Council managed to adopt only 12 resolutions, mostly of a humanitarian nature, clearly reflecting the declining effectiveness of this global governance body. For comparison, in 2000, the Security Council approved 29 resolutions, including key decisions on conflict resolution in the Balkans and Africa. At the same time, 2024 saw continued efforts to explore new formats for multilateral cooperation, including mechanisms within the BRICS group, which held its 16th summit in Kazan for the first time in its newly expanded composition. With enough imagination, one can easily find evidence in the past 12 months to confirm any omen or superstition traditionally associated with leap years. However, all these signs and superstitions predicting upheavals and catastrophes—while aligning with the pessimistic conclusions about the year now ending—do not apply to the year ahead. Human nature, after all, tends to lean more towards optimism than pessimism; if it were the other way around, we would still be living in caves. As they bid farewell to a difficult and challenging year, people around the world continue to hope for better times. And the mere act of hoping for the best is already significant in itself. As Johann Wolfgang von Goethe aptly remarked, “Our wishes are forebodings of our capabilities, harbingers of what we are destined to achieve”. Originally published in Izvestia.

Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Ladies and Gentlemen, Today marks a truly historic milestone. Let me begin by thanking the Chief Negotiators for their dedication and determination. They worked tirelessly, over many years, for an ambitious and balanced agreement – and they succeeded. The bond between Europe and the Mercosur countries is truly one of the strongest in the world. It is a bond anchored in trust, enriched by a shared heritage, that spans centuries of mutual learning and growth. In fact, exactly 30 years ago, in 1994, my predecessor Jacques Delors stood here in Montevideo. He met with your father, dear Luis, who was then President of Uruguay. Together they shared a bold vision. A vision of deeper integration, not only within Europe and Mercosur, but also between them. Today, in Montevideo, we are turning that vision into reality. We are strengthening this unique partnership as never before. And in doing so, we are sending a clear and powerful message to the world. First, in an increasingly confrontational world, we demonstrate that democracies can rely on each other. This agreement is not just an economic opportunity, it is a political necessity. We are like-minded partners. We both believe that openness and cooperation are the true engines of progress and prosperity. I know that strong winds are blowing in the opposite direction – towards isolation and fragmentation. But this agreement is our clear response. We stand together on the global stage, as partners. Second, we are sending a message to our people and businesses in our regions: This agreement was designed with your interests at heart. It is made to work for you. It means: more jobs – and good jobs – more choices and better prices. The European Union and Mercosur create one of the largest trade and investment partnerships the world has ever seen. We are taking barriers down and we are allowing investments in. We are forming a market of over 700 million consumers. This partnership will strengthen entire value chains; it will develop strategic industries; it will support innovation; and it will create jobs and values, on both sides of the Atlantic. Third, we are showing the world that trade can – and must – be guided by values. Trade agreements are more than economic frameworks. They are a way to build communities of shared values. The EU-Mercosur agreement reflects our steadfast commitment to the Paris Agreement and to the fight against deforestation. President Lula's efforts to protect the Amazon are welcome and necessary. But preserving the Amazon is a shared responsibility of all humanity. This agreement ensures that investments respect Mercosur's extraordinary yet fragile natural heritage. My fourth message is that, economically, this is a win-win agreement. Europe is already a leading investment and trade partner for Mercosur. So you know how we do business together. We are focused on fairness and mutual respect. EU-Mercosur will bring meaningful benefits to consumers and businesses, on both sides. It will facilitate European investments in strategic industries across all Mercosur countries: like sustainable mining, renewable energy and sustainable forest products, just to name a few. It will also make it easier to invest in sectors that directly impact the people's daily lives. For example, expanding the electricity grid to rural and remote areas and advancing digitalisation across the region. Finally, let me address my fellow Europeans: This agreement is a win for Europe. 60,000 companies are exporting to Mercosur today – 30,000 of them are small and medium-sized enterprises. They benefit from reduced tariffs, simpler customs procedures and preferential access to some critical raw materials. This will create huge business opportunities. To our farmers: We have heard you, listened to your concerns and we are acting on them. This agreement includes robust safeguards to protect your livelihoods. EU-Mercosur is the biggest agreement ever, when it comes to the protection of EU food and drinks products. The agreement protects 350 EU geographical indications. In addition, our European health and food standards remain untouchable. This is the reality – the reality of an agreement that will save EU companies EUR 4 billion worth of export duties per year while expanding our markets and opening new opportunities for growth and jobs on both sides. I want to thank President Lacalle Pou for hosting this Summit and for bringing us together in Montevideo. This is a good day for Mercosur, a good day for Europe and a landmark moment for our shared future. A whole generation dedicated their effort, vision and determination to bring this agreement to life. Now, it is our turn to honour that legacy. Let us ensure that this agreement delivers on its promises and serves the generations to come. Thank you very much.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском While the IPCC warns that we should reach the emissions peak this year, greenhouse gases released into the atmosphere will grow by 0.8%, according to the annual report from the Global Carbon Project presented this Wednesday at COP29. A cold shower in the middle of the Climate Summit, or rather, a scorching one. The independent organization Global Carbon Project (GCP), specialized in quantifying greenhouse gas emissions from fossil fuel combustion, has released its latest research. The 2024 edition of the Global Carbon Budget projects, with just over a month and a half left in the year, total annual emissions from fossil fuels to reach 37.4 billion tons of carbon dioxide (CO2). This represents a 0.8% increase compared to 2023 — with a possible error range from a 0.3% decrease to a 1.9% increase — marking a new unprecedented record at the worst possible moment. In the crucial year in which, according to the Intergovernmental Panel on Climate Change (IPCC), humanity should reach its emissions peak if it wants any chance of avoiding a global average temperature rise of 1.5°C, not only has a new historical high been reached, but there is also "no signal" that the world has reached the peak of emissions from fossil industries, warn the team behind the research presented this Wednesday. As Professor Pierre Friedlingstein from the University of Exeter’s Global Systems Institute, who coordinated the study, laments, "we still don’t see any signs that fossil fuel burning has peaked." The figures are actually more concerning, as the emissions from the "changes in land use" —which include deforestation caused by humans and their agroindustry — will add 4.2 billion tons of CO2 (GtCO2). This means that we will emit 41.6 billion tons of CO2 into the atmosphere, one billion more than last year, a period that was already a record. More coal, more oil, and more gas amid the acceleration of the climate crisis Despite significant progress in decarbonization, emissions from the three main fossil fuels will increase in 2024. The GCP’s projection is that coal emissions will rise by 0.2%, with coal responsible for 41% of emissions from fossil fuels; oil emissions will increase by 0.9%, with oil burning accounting for 32% of emissions; and gas emissions will grow by 2.4%, contributing 21% of total fossil fuel emissions. On the other hand, emissions from the cement industry, which account for 4% of global emissions, will decrease by 2.8% in 2024, mainly due to a reduction in the EU, although they will increase in China, the United States, and India, according to the research. By economic poles, while the EU — responsible for 7% of global emissions — will reduce its emissions by 3.8% this year, the United States, accounting for 13% of the total annual emissions, will only reduce them by 0.6%. China, the leading polluting power, with 32% of global annual emissions, is projected to increase its emissions by 0.2%, although the projected range suggests it could end the year with a slight decrease. Another emission hub, India, which produces 8% of greenhouse gases, will increase its emissions by 4.6% in 2024. In the rest of the world, where 38% of global emissions are produced, the forecast is an increase of 1.1%. The GCP highlights the growing importance of aviation and maritime transport in the emissions inventory: their emissions are expected to increase by 7.8%, although they remain below their 2019 level. An unprecedented concentration of gases in human history The report, conducted by researchers from over 80 institutions worldwide, including the universities of Exeter and East Anglia (UK), Ludwig-Maximilian University of Munich (Germany), and the CICERO Center for International Climate Research (Norway), provides an overview of emissions over the past decade. While they mention a certain stagnation in the past decade regarding the total greenhouse gases released into the atmosphere, the reality is that emissions continue to rise, and the previous decade (2004-2013) saw strong emission growth, with an annual increase of around 2%. Such figures mean that the concentration of CO2 in the atmosphere continues to rise. Just two weeks ago, the World Meteorological Organization (WMO) warned of a new record for greenhouse gas concentrations last year: an annual average of 420 parts per million (ppm) for CO2. In addition, surface concentrations of 1,935 parts per billion (ppb) of methane (CH4) and 336.9 ppb of nitrous oxide (N2O) were recorded. These represent increases of 151%, 265%, and 125%, respectively, compared to pre-industrial levels. "During 2023, CO2 emissions caused by massive wildfires and a possible reduction in carbon absorption by forests, combined with persistently high CO2 emissions from the burning of fossil fuels for human and industrial activities, drove the observed increase in concentrations," stated the WMO Annual Bulletin on Greenhouse Gases. Never in human history has the atmosphere been so laden with these gases, which have been released at an unprecedented speed: in twenty years, CO2 concentrations have increased by 11.4%. It is expected that atmospheric CO2 levels will reach 422.5 parts per million in 2024, 2.8 ppm higher than in 2023 and 52% above pre-industrial levels. Half-full glass However, at GCP, there is room for hope amid all the discouraging figures. "Despite another increase in global emissions this year, the latest data shows evidence of widespread climate action, with the growing penetration of renewable energy and electric vehicles displacing fossil fuels, and the decrease in deforestation emissions in recent decades, now confirmed for the first time," says Corinne Le Quéré, Research Professor at the Royal Society in the School of Environmental Sciences at the University of East Anglia. In the same vein, Dr. Glen Peters from the CICERO Center in Oslo points out that "there are many signs of positive progress at the country level, and a sense that a peak in global fossil CO2 emissions is imminent." A total of 22 countries, accounting for a combined 23% of global fossil CO2 emissions, have reduced their emissions in the 2014-2023 decade. Furthermore, countries within the Organization for Economic Co-operation and Development (OECD), in the group of wealthier nations, increased their emission reduction rates in the last decade compared to the previous one, from 0.9% to 1.4%. In the non-OECD group (excluding China), emissions growth decreased from 4.9% in the 2004-2013 decade to 1.8% in 2014-2023. However, Peters warns that "the global peak remains elusive" and emphasizes that "climate action is a collective issue, and while gradual emission reductions are occurring in some countries, increases continue in others." Another positive note is that, globally, emissions from the change in land use have decreased by 20% in the last decade, although they are expected to increase in 2024 under this category. While permanent CO2 removal through reforestation and afforestation (new forests) is offsetting emissions, it is only compensating for about half of the emissions from permanent deforestation. The GCP also issues a direct message to proponents of techno-optimism: "Current levels of technology-based carbon dioxide removal (excluding nature-based methods such as reforestation) account for only about one-millionth of the CO2 emitted by fossil fuels," they emphasize.This article was translated and licensed under CC BY-SA 3.0 ES (Atribución-CompartirIgual 3.0 España)

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском The world economy is underperforming as a result of tight monetary policies, weaker global trade, a slowing Chinese economy and uncertainty around the US election. An escalation of conflict in the Middle East could increase uncertainties, harming inflation reduction efforts and hurting growth. It has been over a year since the Hamas-led attack on Israel. Israel’s response in Gaza has resulted in widespread destruction and significant loss of life. The conflict has since expanded beyond Gaza, involving the Houthis in Yemen, Hezbollah in Lebanon and Iranian strikes targeting Israel. In addition to the awful humanitarian cost of the conflicts, the war and the possibility of its further expansion pose significant repercussions for the global economy. This article discusses three potential ways in which the current conflict and a wider conflict in the Middle East could affect the global economy. Increased geopolitical uncertainties First and foremost, an escalation of the Middle East conflict could lead to greater geopolitical uncertainties. Figure 1 shows the evolution of the geopolitical risk (GPR) and geopolitical acts (GPRA) indices (Caldara and Iacoviello, 2022) – these are text-based measures of heightened uncertainties due to adverse geopolitical events such as wars, terrorism and international tensions. (See this article for more discussion about these measures.) Following the Hamas-led attack on 7 October 2023, both the overall GPR index and its ‘war and terror acts’ component spiked strongly, to a level higher than that seen during the ISIS attack in Paris in November 2015. Both indices eased significantly in the months following October 2023 despite the continuation of the conflict. But they jumped again following Israel’s attack on southern Lebanon in September 2024. As of mid-October 2024, the GPR and GPRA remain, respectively, 21% and 35% higher than their historical averages.   What might be the consequences of such elevated levels of risk? Research tells us that higher geopolitical risk raises oil prices (Mignon and Saadaoui, 2024). It also reduces global investment and increases inflation (Caldara et al, 2022). Greater geopolitical risk has a significantly negative impact on business and consumer confidence in several advanced economies (de Wet, 2023). This is because consumers typically cut non-essential spending and businesses postpone investment decisions during turbulent times. This reduces firm-level investment, particularly for businesses with higher initial investment costs and greater market power (Wang et al, 2023). Higher geopolitical risks also reduce global trade and financial flows, causing greater volatility in capital flows in emerging markets (Kaya and Erden, 2023). Oil production cuts and higher energy prices The second way in which the Middle East conflict could affect the global economy is its impact on energy prices, both directly through production cuts and indirectly through greater uncertainties. In response to Israel’s actions against its neighbours, the Organization of the Petroleum Exporting Countries (OPEC) could reduce oil production to penalise countries supporting Israel. A similar action in the 1970s led to a significant jump in oil prices, which contributed to years of stagflation, with higher global inflation and recessions in major economies. Before Israel's attack on Lebanon at the end of September, oil prices had been declining due to falling demand, particularly from China. On the supply side, oil production had increased in Canada and the United States, countering the production cuts by OPEC, and Saudi Arabia was expected to increase oil production from December. But the situation quickly reversed following Israel’s attack on Lebanon. Oil prices jumped by nearly $10 per barrel within a week, before easing by around $5 per barrel. While the immediate oil price impact of Israel’s attack has mostly faded, the potential for higher oil (and other energy) prices still poses a risk to global inflation and economic activity (Liadze et al, 2022). To provide further context for the potential scale of this impact, we can show what would happen if oil and gas prices were to remain $10 higher for two years than the baseline levels projected in the Summer Global Economic Outlook from the National Institute of Economic and Social Research (NIESR), using NIESR’s Global Macroeconometric Model (NiGEM). The results demonstrate that the $10 rise in oil and gas prices increases inflation by around 0.7 percentage points in major economies in the first year (see Figure 2). The impact is higher in China, where the economy relies relatively more on oil imports for its strong manufacturing industries. The inflationary pressures persist for two years despite central banks’ efforts to curb inflation by increasing interest rates.   The effect of higher oil and gas prices on real GDP is shown in Figure 3. In the scenario described above, GDP would fall by 0.1-0.2% in major economies immediately. Partly due to higher interest rates, real GDP would continue to weaken for three years following the shock. After this, economic activity would start to return to base levels as oil and gas prices revert to their levels in the baseline forecast.   Increased shipping costs and supply chain disruptions A wider conflict in the Middle East could also affect the economy through higher shipping costs and supply chain disruptions. Houthi attacks on commercial ships in the Red Sea in late 2023 showed that such disruptions can have a huge impact on global trade through shipping, which comprises 80% of world trade volume. Following the rocket attacks by the Houthi rebels, some commercial shipping re-routed from the Red Sea to the Cape of Good Hope, leading to significant delays in travel times and increased freight costs. As a result, the Shanghai Containerized Freight Index – a measure of sea freight rates – rose by around 260% in the second quarter of 2024 with additional disruptions to supply chains. Our analysis shows that an increase of 10 percentage points in shipping cost inflation can lead to import prices rising by up to around 1% and consumer inflation increasing by around 0.5% in OECD countries. As Figure 4 shows, the impact of shipping costs on inflation shows its full effects over six quarters. This means that inflationary concerns could be with us for the next year and a half as a result of higher shipping costs that may emerge from any possible escalation of the Middle East conflict.   Wider economic implications and policy responses While rising geopolitical risk and increased oil and shipping costs can each individually exert upward pressure on inflation and may slow down economic activity in the global economy, the combined impacts are likely to be greater. Countries with stronger trade and financial ties to the Middle East and those that rely heavily on oil imports as an input for domestic production would be most affected. On the monetary policy front, central banks may have to take a more hawkish stance in response to rising inflationary pressures from the Middle East conflict. This could lead to higher interest rates, which would further dampen economic activity, particularly in an environment where there are already recessionary concerns in some major economies. Beyond its immediate economic implications, an escalation of the Middle East conflict could trigger large-scale displacement of people, which would increase economic and social pressures on neighbouring countries. Many countries may also have to increase their military spending in response to growing regional tensions. Given that public debt levels are already elevated in many countries due to successive shocks to the global economy over the past decade, any additional defence spending could come at the expense of public infrastructure investments that would otherwise boost productivity growth. Overall, the global economy is already underperforming as a result of the lagged effects of tight monetary policies, weaker global trade, a slowing Chinese economy and uncertainties surrounding the upcoming US election and possible changes to US trade policy. A potential escalation of conflict in the Middle East could exacerbate the situation by increasing uncertainties, harming efforts to bring down inflation and reducing global GDP growth. Over the medium and long term, it could further damage the global economy, with the possibility of refugee crises as well as increased defence spending, making the effects more complex and longer lasting. This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском A review of the African strategy of major powers considering the continent's growing global importance in economic, demographic, and even political terms. A few days ago, the United Nations General Assembly approved the so-called “Pact for the Future”, an action that the organization's Secretary-General, Antonio Guterres, described as "a historic moment" because it will allow "a step forward towards a more effective and sustainable networked multilateralism”. In the corridors of the United Nations, intensive work has been carried out for more than nine months to find the greatest possible consensus, and although the document (a 42-page agreement outlining 56 actions in areas ranging from nuclear, climate, and digital issues to human rights) was not put to a vote in the Assembly, it is known to have the support of most nations in the world, with the exception of Russia and some countries like Belarus, Iran, North Korea, and Eritrea. In Africa, 54 countries rejected Russian amendments aimed at halting the dialogue around this document, something perhaps facilitated by the possibility that a second permanent seat for Africa in the United Nations Security Council could soon be consolidated. The United Nations, and therefore multilateralism, are going through a difficult time: Ukraine, Gaza, or Lebanon bear witness to this. The right to veto in the Security Council turns any serious initiative to stop conflicts around the world into a joke. South African President Cyril Ramaphosa called for the reform of the organization to ensure that it becomes truly functional and democratic, in addition to demanding a well-deserved central role for the continent in conflict resolution and modern geopolitics. So, calls for multilateralism are heard everywhere, which basic definition, to put it simply, is when more than three countries agree to move together towards a specific goal, in a context where the world's geopolitics continues to function, breathe, and evolve like any living organism. This is also true in Africa.  China In early September, more than fifty African leaders (a record number) traveled to meet with President Xi Jinping at a new Summit of the Forum on China-Africa Cooperation (FOCAC), the major China-Africa gathering that began in the year 2000. As in each of the previous editions, President Xi announced a significant financial aid package, also outlining the main areas of future cooperation: $51 billion in loans, investments, and assistance for Africa over the next three years. Although this amount surpasses the $40 billion committed in 2021, it remains lower than the $60 billion promised in 2015 and 2018. The Africans also attended the meeting with a message: the trade balance needs to be adjusted. In 2023, Chinese exports to Africa reached $170 billion, while imports from the continent amounted to $100 billion, a significant difference that leaders like South African President Ramaphosa did not hide upon his arrival in Beijing. While China sends manufactured products, agricultural and industrial machinery, as well as vehicles, its imports from Africa are mainly concentrated in raw materials (oil, gas, metals, and minerals). China continues to be involved in initiatives such as the “Belt and Road Initiative”, the modernized Silk Road, and the construction of major infrastructure projects. Russia Russia's presence in Africa is not new. They were already in places like Angola during the Cold War and supported the struggles for independence in the 1960s, but perhaps now their actions on the continent are receiving more attention. With almost the entire world questioning its invasion of Ukraine, Russians find in Africa, especially in the Sahel countries, a point from which to secure mineral and economic resources and, at the same time, create tension and concern for the Europeans. Their support for military junta coups in countries like Mali, Niger, or Burkina Faso, or their influence in regimes like that of the Central African Republic, with a business model that exchanges security for mineral resources, for example, has shaken up the African geopolitical map. Their promises of cooperation in satellite or nuclear technology, still up in the air, captivate governments that have distanced themselves from the West and have chosen them as partners in recent years. The European Union In Europe, in my opinion, we continue struggling to understand how to approach our relationship and alignment with our African friends and neighbors. Individually, each country is making its efforts: Italy with the Mattei Plan, France repositioning itself after withdrawing from the Sahel countries, Denmark with a strong commitment, and now Spain, working on a new strategy of its own that we will learn about very soon. The migration factor and the colonial legacy continue to be issues that influence the relationship with African governments and even with civil societies. In geopolitical terms, Europe has given a name to its aspirations of influence: the Global Gateway. The undertaking is so vast and its objectives so ambitious that it deserves one, or even several, separate articles. Not only do I promise this, but I also share that, from Casa África, we will soon bring its representatives to the Canary Islands to explain what the Global Gateway entails, what funds it has, and how we, from the Archipelago, can act as a bridge with them. United States The U.S. elections are approaching, but before leaving office, Joe Biden will visit Africa (specifically Angola) for the first time in his term. This is a clear gesture towards the continent, which at least partially makes up for the fact that the previous president, Donald Trump, not only never visited it even once, but also left behind that infamous phrase caught by an open microphone in which he referred to African countries as “shitholes”. Faced with the overwhelming Chinese presence and the concerning Russian influence in the Sahel, many voices in the United States have called for a genuine diplomatic and economic effort on the continent. The choice of Angola is not trivial: the Americans are heavily invested in a strategic project crucial for the geopolitics of energy, the Lobito Corridor, a railway line that will connect the Angolan port of Lobito (on the Atlantic) with the city of Kolwezi in the Democratic Republic of the Congo. The goal: the transit of strategic minerals for the North American and European markets, which is key to reducing dependence on China for the so-called critical minerals (lithium, nickel, cobalt, graphite, manganese, or rare earth elements). Türkiye For a few years now, Türkiye has had a very clear objective of increasing its presence and influence in Africa. In the last two decades, Türkiye has nearly quadrupled the number of its embassies in Africa: from 12 in 2002 to 44 in 2022. Its flag carrier, Turkish Airlines, connects Istanbul with 62 African destinations. At the same time, it has achieved diplomatic reciprocity: 38 African countries have established embassies in Ankara. All of this is reflected in trade volumes, which increased from $5.4 billion in 2003 to over $41 billion in 2022 (although they dropped slightly to $37 billion in 2023). For example, in 2011, President Erdogan was the first international leader to dare to set foot in Somalia in 20 years. Now, Türkiye has a military base in Mogadishu and oil and gas exploitation agreements. It is also the fourth-largest arms supplier to sub-Saharan Africa: helicopters and, above all, the famous Bayraktar drones have been sold to many African countries. And, finally, the Turks are also making significant strides in infrastructure construction (more than 1,800 projects in the last 20 years, including the modernization of Tanzania's railways, for example). A noteworthy effort, but obviously still far behind the Chinese and Russians. Published in Kiosco Insular, eldiario.es, and Canarias7 on September 27 and 28, 2024.